Money Can Buy Happiness — You’re Just Buying the Wrong Things

Early in my career, at a glittering event, I saw a top actor getting paid in crores for a single dance.

Unlike the other actors who rehearsed for hours — sweating under the lights, chugging energy drinks, and fine-tuning every move-- this actor strolled in minutes before the show. He climbed onto the stage, flexed his muscles, pulled his collar in the signature hook step of his blockbuster song, and that was it. The crowd went wild. The cheers were deafening. He got the loudest applause and left with a paycheck worth crores, while I, after a fifteen-hour day, earned a fraction of that.

That moment hit me like a quiet humiliation. It wasn’t jealousy exactly--more the discomfort of realising that effort and reward don’t always shake hands. And yet, almost automatically, a thought bubbled up in my mind: “Money can’t buy happiness. Look how miserable his love life is! The women around him don’t love him--they hang around for what he can do for their careers. At least I’ll go home to someone waiting impatiently to hug me because he loves me.”

The thought soothed my bruised sense of fairness. But was it true? It was a classic psychological defense mechanism-- the reflexive narrative that wealth and well-being are inversely related. It’s a comforting lie we tell ourselves to restore order.

When someone else’s visible rewards seem wildly disproportionate to their effort, especially compared to our own, the mind experiences a kind of moral vertigo. It’s called cognitive dissonance: the tension that arises when reality violates our sense of fairness or personal worth. To ease that discomfort, we tell ourselves stories that preserve self-respect and restore balance in a world that often isn’t.

This is why “money can’t buy happiness” has become one of the most comforting lies we tell ourselves.

According to Leon Festinger’s Social Comparison Theory, we naturally evaluate ourselves by comparing with others. When that comparison isn’t flattering, we reach for a downward comparison--imagining that those above us in wealth or fame are somehow poorer in love, health, or integrity. It’s a psychological shortcut to protect self-esteem. Even without evidence, the mind clings to this narrative because it temporarily restores dignity and justice.

The idea that the rich cry in their mansions while the poor laugh in their one-room flats, while comforting, is a myth. Research shows that the relationship between money and happiness is nuanced, not negative.

Studies show that happiness does, in fact, increase with income--up to a point. Nobel laureate Daniel Kahneman’s work shows that emotional well-being rises steadily with income but plateaus beyond roughly $75,000 a year (around ₹60 lakh annually in Indian terms). Beyond that, extra income does little to improve day-to-day mood. However, life satisfaction--our overall judgment of how meaningful our life feels--keeps rising with higher income. In other words, money can’t buy daily joy indefinitely, but it can keep buying a sense of progress and control.

For those who truly understand (experientially and not just intellectually) that happiness and meaning aren’t directly related, the diminishing returns of wealth are self-evident. But most people don’t operate this rationally. Research shows that this detachment from monetary rewards is rare. Until we reach the level of spiritual masters like Ramakrishna Paramahamsa, we still need money to be happy.

Then why are so many rich people still unhappy?

Also Read: Akshay Kumar, Parenting, and the Lie We Tell Ourselves

Why Are So Many Rich People Still Unhappy?
The answer lies in how they use their wealth. Psychologist Martin Seligman’s formula for happiness, expressed as H = S + C + V, helps unpack this:

• H stands for our enduring level of happiness (not fleeting pleasure)
• S is our biological set point — our genetic predisposition to happiness (about 50%)
• C represents life circumstances — income, health, relationships (roughly 10%)
• V refers to voluntary actions — our mindset, habits, and choices (around 40%)

Some people have a predisposition to lower happiness due to personality or genetics. Wealth doesn’t change this baseline, so rich people prone to unhappiness still struggle. Money influences only the “C” part--just 10%. The remaining 40% depends on who we are and what we do with our choices. That’s why some people stay miserable despite abundance--they’re buying for comfort, not for contentment. They spend to fill voids instead of investing in the “V” factor: voluntary actions that genuinely elevate well-being.

The critical insight is that money is a tool--its impact on well-being depends entirely on how we wield it. The question isn’t whether to pursue wealth, but what to pursue with it.

Also Read: Sarci-Sense: Convenience Has Made Us Comfortable, Not Kind

So,
What Are Those Voluntary Actions That Make Us Happy?

Seligman’s PERMA model offers a powerful blueprint. It stands for Positive Emotion, Engagement, Relationships, Meaning, and Accomplishment--the five pillars of lasting happiness. Money can support each, but only when spent with awareness.

Take Positive Emotion. This is the most basic dividend, but it’s often mismanaged. Wealth eliminates scarcity anxiety, but its real value lies in funding experiences that generate joy, awe, and gratitude--a family safari, a curated music collection, supporting the arts. The key metric isn’t the price tag but the emotional ROI. Shared experiences with loved ones often yield higher returns than a depreciating luxury asset.

Next, Engagement --deep absorption in a meaningful activity where time dissolves. Money can buy the space for this: funding a passion for classical music, mastering a sport, or dedicating time to strategic thinking. The scarcer resource here isn’t capital but time. Investing in pursuits that induce flow is a direct investment in cognitive renewal and creativity.

Then come Relationships --the cornerstone of well-being. The happiest people aren’t the richest, but the most connected. Money spent on nurturing bonds --hosting dinners, visiting parents, showing up for friends --has a compounding emotional return.

Meaning, too, is something money can magnify. Here, wealth transforms from a personal tool into a legacy-building force --philanthropy, impact investing, or funding the next generation of innovators. Look at Indian leaders like Azim Premji, whose monumental philanthropy has woven his wealth into national progress, or Ratan Tata, whose post-retirement investments nurture India’s entrepreneurial spirit. Allocating capital to a purpose larger than oneself doesn’t just feel good ---it creates a legacy that outlives quarterly reports.

Finally, Accomplishment --the pride of setting and achieving meaningful goals. Wealth can buy opportunity, but achievement comes from discipline and growth. When used to expand capacity rather than indulgence, money fuels self-efficacy --the quiet confidence that life is moving forward. Strategic use of capital here means funding personal and professional growth: education, ventures, or physical milestones.

Seen this way, money isn’t the enemy of happiness --it’s an amplifier. It magnifies whatever already exists. If your life is rooted in emptiness, wealth will echo that emptiness louder. If it’s anchored in meaning, money gives that meaning reach.

The tragedy is that most of us aren’t unhappy because we lack money --but because we misuse it. The chronic unhappiness among the wealthy isn’t a failure of finance but a failure of strategy. They’re shopping in the wrong aisles, accumulating status liabilities instead of investing in the assets of well-being outlined by the PERMA model.

Choose to invest in purpose, people, and personal growth, and you will find that money can, indeed, buy a specific and powerful form of happiness.